Don’t Babysit Subcontractors — Teach Them

Managing subcontractors can be a draining, thankless task. How many times have you had to adjust project plans or schedules because a sub failed to deliver?

We used to burn a lot of valuable time babysitting our subs through projects. Sometimes we had to practically take over managing their tasks for them in order to prevent them from crashing the whole project.

But then, on a job that required us to use a small subcontractor we’ll call Quantum Robotics, we figured out how we could solve that problem. Roger managed the project, so we’ll let him tell it in his own words:

I knew from experience that Quantum required intense supervision to make schedule. I was also worried that the company might lose money on the project. When you contract with small subs, you need to concern yourself with their financial situation. If they go belly-up before they deliver their work, things can get messy for the whole project.

Midway through our project Quantum ran into issues that I thought might compromise their profitability. So I asked the owner, “Dave, are you making money on this project?” He said, “Relax. We’ll make up for the problems.”

At first I figured Dave was just being his usual closed-mouth self. Then I got a sinking feeling: He didn’t know the answer to my question. When I asked again, he sighed. “Honestly, I won’t know how profitable this project is until we can crunch the final numbers.”

I had grown accustomed to the weekly financial updates we do on our own projects, including metrics such as gross profit per hour. Quantum had nothing like that, which meant I’d have to babysit the company every step of the way. And then it dawned on me: If I could teach Dave a few of the methods we use to generate and track project metrics, he’d have similar data at his fingertips. So would I.

It took some coaxing, but I managed to convince him to give our metrics a shot. We took his project budget, added up hours spent and materials costs, and came up with a forecast of remaining expenditures. That allowed us to estimate his gross profit per hour for the entire project. We could see he had some challenges — but if he met them, he’d be OK. The key was for him to keep a close watch on performance so he could correct course immediately when the project metrics showed a dip in the profitability of his team’s efforts.

For the rest of the project I eased off on the babysitting. Quantum now had metrics that would highlight critical issues, so the folks there could oversee their own progress. Eventually, they completed the project on time and everyone profited from the job.

No PM likes interfering with a sub’s business, and the sub usually likes it even less. But if you can help them monitor their work accurately early on — in a way that makes sense to both parties — you won’t have to intervene nearly as much later to keep things on track.

This is the fourth post in the authors’ blog series on project management. The series draws on advice from their bookProject Management for Profit.

Joe Knight is CFO and co-owner of Setpoint, where Roger Thomas is vice president of operations and a project manager, and Brad Angus is co-owner and CEO. They are the authors of Project Management for Profit.

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